Page 59 - Future Demands Jan 2021
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FUTURE DEMANDS
ANDREW MONTLAKE
MANAGING DIRECTOR – CORECO
THERE’S NO SUCH THING AS A FREE HOLIDAY
Let’s start by getting one thing straight; the mortgage payment “holiday” scheme is not a holiday. It is a deferral scheme, and it always irks me when it is described as anything else.
The choice of the word “holiday” conjures up a whole host of different images – from relaxing in the sun to skiing down a mountain – not worrying about debt piling up, or a proper freebie.
This scheme was always meant to be a need-to-have rather than a nice-to-have, but was introduced in such a way that many people who did not really need the help thought they would pile in and take advantage of it. This was done without realising the potential issues it could cause.
It is all very well not having to pay anything for three months, but the interest you didn’t pay didn’t disappear. Instead, the interest you deferred got added back onto the loan amount, whilst your capital balance didn’t decrease.
In other words, your mortgage amount increased slightly, while you continued to attract interest on the whole amount.
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